EXHIBIT 4.6
EXECUTION COPY
PLEDGE AND SECURITY AGREEMENT
made by
BEAR ISLAND PAPER COMPANY, LLC
and its Restricted Subsidiaries
in favor of
CRESTAR BANK.,
as Trustee
Dated as of December 1, 1997
TABLE OF CONTENTS
Page
SECTION I. DEFINED TERMS . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . 2
1.2 Other Definitional Provisions . . . . . . . . 5
SECTION II. GRANT OF SECURITY INTEREST . . . . . . . . 6
SECTION III. REPRESENTATIONS AND WARRANTIES . . . . . . 7
3.1 Representations in Bank Credit Agreement . . . 7
3.2 Title; No Other Liens . . . . . . . . . . . . 7
3.3 Perfected First Priority Liens . . . . . . . . 7
3.4 Chief Executive Office . . . . . . . . . . . . 7
3.5 Inventory and Equipment . . . . . . . . . . . 7
3.6 Farm Products . . . . . . . . . . . . . . . . 7
3.7 Pledged Securities . . . . . . . . . . . . . . 7
3.8 Receivables . . . . . . . . . . . . . . . . . 8
3.9 Contracts . . . . . . . . . . . . . . . . . . 8
3.10 Intellectual Property . . . . . . . . . . . . 9
3.11 Vehicles . . . . . . . . . . . . . . . . . . . 9
SECTION IV. COVENANTS . . . . . . . . . . . . . . . . . 9
4.1 Covenants in Bank Credit Agreement . . . . . . 9
4.2 Delivery of Instruments and Chattel Paper . 10
4.3 Maintenance of Insurance . . . . . . . . . . 10
4.4 Payment of Obligations . . . . . . . . . . . 10
4.5 Maintenance of Perfected Security Interest;
Further Documentation . . . . . . . . . . . 10
4.6 Changes in Locations, Name, etc. . . . . . . 11
4.7 Notices . . . . . . . . . . . . . . . . . . 12
4.8 Pledged Securities . . . . . . . . . . . . . 12
4.9 Receivables . . . . . . . . . . . . . . . . 13
4.10 Contracts . . . . . . . . . . . . . . . . . 13
4.11 Intellectual Property . . . . . . . . . . . 14
4.12 Vehicles . . . . . . . . . . . . . . . . . . 15
SECTION V. REMEDIAL PROVISIONS . . . . . . . . . . . 15
5.1 Certain Matters Relating to Receivables . . 15
5.2 Communications with Obligors; Grantors Remain
Liable . . . . . . . . . . . . . . . . . . . 16
5.3 Pledged Securities . . . . . . . . . . . . . 16
5.4 Proceeds to be Turned Over To Trustee . . . 17
5.5 Application of Proceeds . . . . . . . . . . 17
5.6 Code and Other Remedies . . . . . . . . . . 18
5.7 Registration Rights . . . . . . . . . . . . 18
5.8 Waiver; Deficiency . . . . . . . . . . . . . 19
SECTION VI. THE TRUSTEE . . . . . . . . . . . . . . 19
6.1 Trustee's Appointment as Attorney-in-Fact,
etc . . . . . . . . . . . . . . . . . . . . 19
6.2 Duty of Trustee . . . . . . . . . . . . . . 21
6.3 Execution of Financing Statements . . . . . 21
6.4 Authority of Trustee . . . . . . . . . . . 21
SECTION VII. MISCELLANEOUS 22
7.1 Amendments in Writing . . . . . . . . . . . 22
7.2 Notices . . . . . . . . . . . . . . . . . . 22
7.3 No Waiver by Course of Conduct; Cumulative
Remedies . . . . . . . . . . . . . . . . . . 22
7.4 Enforcement Expenses; Indemnification . . . 22
7.5 Successors and Assigns . . . . . . . . . . . 23
7.6 Set-Off . . . . . . . . . . . . . . . . . . 23
7.7 Counterparts . . . . . . . . . . . . . . . . 23
7.8 Severability . . . . . . . . . . . . . . . . 23
7.9 Section Headings . . . . . . . . . . . . . . 23
7.10 Integration . . . . . . . . . . . . . . . . 23
7.11 GOVERNING LAW . . . . . . . . . . . . . . . 24
7.12 Submission To Jurisdiction; Waivers . . . . 24
7.13 Acknowledgements . . . . . . . . . . . . . . 24
7.14 WAIVER OF JURY TRIAL . . . . . . . . . . . . 24
7.15 Additional Grantors . . . . . . . . . . . . 25
7.16 Releases . . . . . . . . . . . . . . . . . . 25
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT, dated as of December
1, 1997, made by Bear Island Paper Company, LLC (the
"Company") and each Restricted Subsidiary of the Company
that becomes a Guarantor (each as defined in the
Indenture (as defined below)) (together, the "Grantors"),
in favor of CRESTAR BANK, as Trustee for the benefit of
the holders of the Senior Secured Notes due 2007
(together with the Exchange Notes exchanged for such
notes pursuant to the Indenture, the "Notes") (in such
capacity, the "Trustee") pursuant to the Indenture dated
as of December 1, 1997 (as amended, supplemented or
otherwise modified from time to time, the "Indenture"),
among the Company and Bear Island Finance Company II (the
"Issuers"), Bear Island Timberlands Company, L.L.C. and
F.F. Xxxxx, Inc., together as security parties, Xxxxx-
Xxxxx Industries, Inc., as pledgor and the Trustee.
W I T N E S S E T H:
WHEREAS, the Issuers have duly authorized the
creation and issuance of the Notes (as such term is
hereinafter defined), and have authorized, executed and
delivered the Indenture;
WHEREAS, the obligations of the Issuers under the
Notes and the Indenture are secured by a pledge by the
Grantors of the Collateral;
NOW, THEREFORE, on consideration of the premises,
and to induce (i) the Trustee to enter into the Indenture
and (ii) to enhance the creditworthiness of the Notes,
the Grantors hereby agree with the Trustee, for the
benefit of purchasers of the Notes, as follows:
SECTION I DEFINED TERMS
A. Definitions. 1. Unless otherwise defined
herein, terms defined in the Indenture and used herein
shall have the meanings given to them in the Indenture,
and the following terms which are defined in the Uniform
Commercial Code in effect in the State of New York on the
date hereof are used herein as so defined: Accounts,
Chattel Paper, Documents, Equipment, Farm Products,
Instruments, Inventory and Investment Property.
2. The following terms shall have the following
meanings:
"Administrative Agent": as defined in the Senior
Security and Pledge Agreement.
"Agreement": this Pledge and Security Agreement, as
the same may be amended, supplemented or otherwise
modified from time to time.
"Bank Credit Agreement": the credit agreement,
dated as of December 1, 1997 (as amended, supplemented or
otherwise modified from time to time) among the Company),
Toronto-Dominion (Texas), Inc., as administrative agent
(in such capacity, the "Paper Company Agent"), the
arranger party thereto and the Lenders parties thereto
(the "Paper Company Lenders").
"Collateral": as defined in Section 2.
"Collateral Account": any collateral account
established by the Trustee as provided in Section V(D).
"Collateral Documents": the pledge agreement, dated
as of December 1, 1997, made by Xxxxx-Xxxxx Industries,
Inc. in favor of the Trustee (the "Timberlands Pledge
Agreement"), the pledge and security agreement, dated as
of December 1, 1997, made by Xxxxx-Xxxxx Industries, Inc.
in favor of the Trustee (the "Xxxxx Pledge Agreement"),
and this Agreement, in each case as the same may be
amended, modified or otherwise supplemented from time to
time.
"Contracts": the contracts and agreements listed in
Schedule 7, as the same may be amended, supplemented or
otherwise modified from time to time, including, without
limitation, (i) all rights of any Grantor to receive
moneys due and to become due to it thereunder or in
connection therewith, (ii) all rights of any Grantor to
damages arising thereunder and (iii) all rights of any
Grantor to perform and to exercise all remedies
thereunder.
"Copyrights": (i) all copyrights arising under the
laws of the United States, any other country or any
political subdivision thereof, whether registered or
unregistered and whether published or unpublished
(including, without limitation, those listed in Schedule
6), all registrations and recordings thereof, and all
applications in connection therewith, including, without
limitation, all registrations, recordings and
applications in the United States Copyright Office, and
(ii) the right to obtain all renewals thereof.
"Copyright Licenses": any written agreement naming
any Grantor as licensor or licensee (including, without
limitation, those listed in Schedule 6), granting any
right under any Copyright, including, without limitation,
the grant of rights to manufacture, distribute, exploit
and sell materials derived from any Copyright, in each
case with respect to all of the foregoing only to the
extent the grant by such Grantor of a security interest
pursuant to this Agreement in its right, title and
interest in such contract, agreement, instrument or
indenture is not prohibited by such contract, agreement,
instrument or indenture without the consent of any party
thereto, would not give any other party to such contract,
agreement, instrument or indenture the right to terminate
its obligations thereunder, or is permitted with consent
if all necessary consents to such grant of a security
interest have been obtained from the other parties
thereto (it being understood that the foregoing shall not
be deemed to obligate such Grantor to obtain such
consents); provided, that the foregoing limitation shall
not affect, limit, restrict or impair the ability of such
Grantor of a security interest pursuant to this Agreement
in any Receivable or any money or other amounts due or to
become due under any such contract, agreement, instrument
or indenture.
"Domestic Subsidiary": any Restricted Subsidiary of
any Grantor organized under the laws of any jurisdiction
within and including the United States of America.
"Foreign Subsidiary": any Restricted Subsidiary of
any Grantor that is not a Domestic Subsidiary.
"General Intangibles": all "general intangibles" as
such term is defined in Section 9-106 of the Uniform
Commercial Code in effect in the State of New York on the
date hereof and, in any event, including, without
limitation, with respect to any Grantor, all contracts,
agreements, instruments and indentures in any form, and
portions thereof, to which such Grantor is a party or
under which such Grantor has any right, title or interest
or to which such Grantor or any property of such Grantor
is subject, as the same may from time to time be amended,
supplemented or otherwise modified, including, without
limitation, (i) all rights of such Grantor to receive
moneys due and to become due to it thereunder or in
connection therewith, (ii) all rights of such Grantor to
damages arising thereunder and (iii) all rights of such
Grantor to perform and to exercise all remedies
thereunder, in each case with respect to all of the
foregoing only to the extent the grant by such Grantor of
a security interest pursuant to this Agreement in its
right, title and interest in such contract, agreement,
instrument or indenture is not prohibited by such
contract, agreement, instrument or indenture without the
consent of any other party thereto, would not give any
other party to such contract, agreement, instrument or
indenture the right to terminate its obligations
thereunder, or is permitted with consent if all necessary
consents to such grant of a security interest have been
obtained from the other parties thereto (it being
understood that the foregoing shall not be deemed to
obligate such Grantor to obtain such consents); provided,
that the foregoing limitation shall not affect, limit,
restrict or impair the grant by such Grantor of a
security interest pursuant to this Agreement in any
Receivable or any money or other amounts due or to become
due under any such contract, agreement, instrument or
indenture.
"Intellectual Property": the collective reference
to all rights, priorities and privileges relating to
intellectual property, whether arising under United
States, multinational or foreign laws or otherwise,
including, without limitation, the Copyrights, the
Copyright Licenses, the Patents, the Patent Licenses, the
Trademarks and the Trademark Licenses, and all rights to
xxx at law or in equity for any infringement or other
impairment thereof, including the right to receive all
proceeds and damages therefrom; in each case only to the
extent the grant by such Grantor of a security interest
pursuant to this Agreement in its right, title and
interest in such intellectual property is not prohibited
by any agreement relating thereto without the consent of
any other party thereto, would not give any other party
to such agreement the right to terminate its obligations
thereunder, or is permitted with consent if all necessary
consents to such grant of a security interest have been
obtained from the other parties thereto (it being
understood that the foregoing shall not be deemed to
obligate such Grantor to obtain such consents); provided,
that the foregoing limitation shall not affect, limit,
restrict or impair the grant by such Grantor of a
security interest pursuant to this Agreement in any
Receivable or any money or other amounts due or to become
due in respect of any intellectual property.
"Intercompany Note": any promissory note evidencing
loans made by any Grantor to any Affiliate or any of its
Subsidiaries.
"Intercreditor Agreement": the intercreditor
agreement, dated as of December 1, 1997, among the
Trustee, the Issuers, Toronto-Dominion (Texas), Inc. as
agent for the Timberlands Agent, for the benefit of the
Timberlands Lenders and as agent for the Paper Company
Agent for the benefit of the Paper Company Lenders (the
"Agent"), as it may be amended, supplemented or otherwise
modified from time to time.
"Material Adverse Effect": as defined in the
Purchase Agreement.
"New York UCC": the Uniform Commercial Code as from
time to time in effect in the State of New York.
"Paper Company Agent": as defined in the definition
of the Bank Credit Agreement.
"Paper Company Lenders": as defined in the
definition of the Bank Credit Agreement.
"Patents": (i) all letters patent of the United
States, any other country or any political subdivision
thereof, all reissues and extensions thereof including,
without limitation, any of the foregoing referred to in
Schedule 6, (ii) all applications for letters patent of
the United States or any other country and all divisions,
continuations and continuations-in-part thereof,
including, without limitation, any of the foregoing
referred to in Schedule 6, and (iii) all rights to obtain
any reissues or extensions of the foregoing.
"Patent License": all agreements, whether written
or oral, providing for the grant by or to any Grantor of
any right to manufacture, use or sell any invention
covered in whole or in part by a Patent, including,
without limitation, any of the foregoing referred to in
Schedule 6; in each case with respect to all of the
foregoing only to the extent the grant by such Grantor of
a security interest pursuant to this Agreement in its
right, title and interest in such contract, agreement,
instrument or indenture is not prohibited by such
contract, agreement, instrument or indenture without the
consent of any other party thereto, would not give any
other party to such contract, agreement, instrument or
indenture the right to terminate its obligations
thereunder, or is permitted with consent if all of the
necessary consents to the grant of a security interest
have been obtained from the other parties thereto (it
being understood that the foregoing shall not be deemed
to obligate such Grantor to obtain such consents);
provided that the foregoing limitation shall not affect,
limit, restrict or impair the grant by any such Grantor
of a security interest pursuant to this Agreement in any
Receivable or any money or other amounts due or to become
due under any such contract, agreement, instrument or
indenture.
"Pledged LLC Interests": in each case, whether now
existing or hereafter acquired, all of each Grantor's
right, title and interest in and to:
(a) the equity interests of any Pledged Security
Issuer that is a limited liability company, but not any
Grantor's obligations from time to time as a holder of
interests in any such Pledged Security Issuer (unless the
Trustee or its designee, on behalf of the Trustee, shall
elect to become a holder of equity interests in any such
Pledged Security Issuer in connection with its exercise
of remedies pursuant to the terms hereof);
(b) any and all moneys due and to become due to
each Grantor now or in the future by way of a
distribution made to any Grantor in its capacity as a
holder of equity interests in any such Pledged Security
Issuer or otherwise in respect of such Grantor's interest
as a holder of equity interests in any such Pledged
Security Issuer;
(c) any other property of any such Pledged Security
Issuer to which each Grantor now or in the future may be
entitled in respect of its equity interests in any such
Pledged Security Issuer by way of distribution, return of
capital or otherwise;
(d) any other claim or right which each Grantor now
has or may in the future acquire in respect of its equity
interests in any such Pledged Security Issuer;
(e) all certificates, options or rights of any
nature whatsoever that may be issued or granted by any
such Pledged Security Issuer with respect to the equity
interests of such Pledged Security Issuer to each Grantor
while this Agreement is in effect; and
(f) to the extent not otherwise included, all
Proceeds of any or all of the foregoing.
"Pledged Notes": all promissory notes listed on
Schedule 2, all Intercompany Notes at any time issued to
any Grantor and all other promissory notes issued to or
held by any Grantor.
"Pledged Note Collateral": all of the mortgages,
deeds of trust, security agreements, assignments of
leases, UCC financing statements, guaranties and other
documents securing or guaranteeing the indebtedness
evidenced by the Pledged Notes.
"Pledged Partnership Interests": in each case,
whether now existing or hereafter acquired, all of each
Grantor's right, title and interest in and to:
(a) the partnership interests of any Pledged
Security Issuer that is a partnership, but not any
Grantor's obligations from time to time as a general or
limited partner, as the case may be, in any such Pledged
Security Issuer (unless the Trustee or its designee, on
behalf of the Trustee, shall elect to become a general or
limited partner, as the case may be, in any such Pledged
Security Issuer in connection with its exercise of
remedies pursuant to the terms hereof);
(b) any and all moneys due and to become due each
Grantor now or in the future by way of a distribution
made to each Grantor in its capacity as a general partner
or limited partner, as the case may be, in any such
Pledged Security Issuer or otherwise in respect of each
such Grantor's interest as a general partner or limited
partner, as the case may be, in any such Pledged Security
Issuer;
(c) any other property of any such Pledged Security
Issuer to which each Grantor now or in the future may be
entitled in respect of its interests as a general partner
or limited partner, as the case may be, in any such
Pledged Security Issuer by way of distribution, return of
capital or otherwise;
(d) any other claim or right which each Grantor now
has or may in the future acquire in respect of its
general or limited partnership interests in any such
Pledged Security Issuer;
(e) the partnership agreement or other
organizational documents of any such Pledged Security
Issuer;
(f) all certificates, options or rights of any
nature whatsoever that may be issued or granted by any
such Pledged Security Issuer with respect to the
partnership interests of such Pledged Security Issuer to
each Grantor while this Agreement is in effect; and
(g) to the extent not otherwise included, all
Proceeds of any or all of the foregoing.
"Pledged Security Issuers": the collective
reference to each issuer of a Pledged Security.
"Pledged Securities": the collective reference to
the Pledged Notes, the Pledged Partnership Interests, the
Pledged LLC Interests and the Pledged Stock, together
with any Proceeds thereof.
"Pledged Stock": the shares of Capital Stock listed
on Schedule 2, together with any other shares, stock
certificates, options or rights of any nature whatsoever
in respect of the Capital Stock (other than Pledged LLC
Interests and Pledged Partnership Interests) of any
Person (other than the capital stock of Bear Island
Finance Company II) that may be issued or granted to, or
held by, any Grantor while this Agreement is in effect.
"Proceeds": all "proceeds" as such term is defined
in Section 9-306(1) of the Uniform Commercial Code in
effect in the State of New York on the date hereof and,
in any event, shall include, without limitation, all
dividends or other income from the Pledged Securities,
collections thereon or distributions or payments with
respect thereto.
"Purchase Agreement": the Purchase Agreement, dated
November 21, 1997, among TD Securities (USA) Inc.,
Salomon Brothers Inc and the Issuers.
"Receivable": any right to payment for goods sold
or leased or for services rendered, whether or not such
right is evidenced by an Instrument or Chattel Paper and
whether or not it has been earned by performance
(including, without limitation, any Account).
"Secured Obligations": the collective reference to
(a) the obligations of the Issuers under the Indenture
and (b) all obligations and liabilities of the Grantors
that may arise under or in connection with this Agreement
or any other Collateral Document to which the Grantors
are a party, whether on account of fees, indemnities,
costs, expenses or otherwise that are required to be paid
by the Grantor pursuant to the terms thereof (including
without limitation all reasonable fees, and disbursements
of counsel to the Trustee that are required to be paid by
the Grantors pursuant to the terms of this Agreement or
any other Collateral Document to which the Grantors are a
party.
"Securities Act": the Securities Act of 1933, as
amended.
"Senior Security and Pledge Agreement": the
security and pledge agreement dated as of December 1,
1997 made by the Company and its subsidiaries that
become a party thereto in favor of the Administrative
Agent, as amended, modified or supplemented from time to
time.
"Timberlands Agent": as defined in the definition
of the Timberlands Loan.
"Timberlands Loan": the credit agreement, dated as
of December 1, 1997 (as amended, supplemented or
otherwise modified from time to time) among the Pledgor,
Toronto-Dominion (Texas), Inc., as administrative agent
(in such capacity, the "Timberlands Agent") and the
Lenders parties thereto.
"Trademarks": (i) all trademarks, trade names,
corporate names, company names, business names,
fictitious business names, trade styles, service marks,
logos and other source or business identifiers, and all
goodwill associated therewith, now existing or hereafter
adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith,
whether in the United States Patent and Trademark Office
or in any similar office or agency of the United States,
any State thereof or any other country or any political
subdivision thereof, or otherwise, and all common-law
rights related thereto, including, without limitation,
any of the foregoing referred to in Schedule 6, and (ii)
the right to obtain all renewals thereof.
"Trademark License": any agreement, whether written
or oral, providing for the grant by or to any Grantor of
any right to use any Trademark, including, without
limitation, any of the foregoing referred to in Schedule
6; in each case with respect to all of the foregoing only
to the extent the grant by such Grantor of a security
interest pursuant to this Agreement in its right, title
and interest in such contract, agreement, instrument or
indenture is not prohibited by such contract, agreement,
instrument or indenture without the consent of any other
party thereto, would not give any other party to such
contract, agreement, instrument or indenture the right to
terminate its obligations thereunder, or is permitted
with consent if all of the necessary consents to the
grant of a security interest have been obtained from the
other parties thereto (it being understood that the
foregoing shall not be deemed to obligate such Grantor to
obtain such consents); provided that the foregoing
limitation shall not affect, limit, restrict or impair
the grant by any such Grantor of a security interest
pursuant to this Agreement in any Receivable or any money
or other amounts due or to become due under any such
contract, agreement, instrument or indenture.
"Vehicles": all cars, trucks, trailers,
construction and earth moving equipment and other
vehicles covered by a certificate of title law of any
state and, in any event including, without limitation,
the vehicles listed on Schedule 8 and all tires and other
appurtenances to any of the foregoing.
B. Other Definitional Provisions. 1. The words
"hereof," "herein", "hereto" and "hereunder" and words of
similar import when used in this Agreement shall refer to
this Agreement as a whole and not to any particular
provision of this Agreement, and Section and Schedule
references are to this Agreement unless otherwise
specified.
2. The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms
of such terms.
3. Where the context requires, terms relating to the
Collateral or any part thereof, when used in relation to
a Grantor, shall refer to such Grantor's Collateral or
the relevant part thereof.
SECTION II GRANT OF SECURITY INTEREST
A. Each Grantor hereby assigns and transfers to
the Trustee, and hereby grants to the Trustee, a security
interest in, all of the following property now owned or
at any time hereafter acquired by such Grantor or in
which such Grantor now has or at any time in the future
may acquire any right, title or interest (collectively,
the "Collateral"), as collateral security for the prompt
and complete payment and performance when due (whether at
the stated maturity, by acceleration or otherwise) of the
Secured Obligations:
1. all Accounts;
2. all Chattel Paper;
3. all Contracts;
4. all Documents;
5. all Equipment;
6. all General Intangibles;
7. all Instruments;
8. all Intellectual Property;
9. all Inventory;
10. all Pledged Securities;
11. all Vehicles;
12. all Investment Property;
13. all books and records pertaining to the
Collateral; and
14. to the extent not otherwise included, all
Proceeds and products of any and all of the
foregoing and all collateral security and
guarantees given by any Person with respect to
any of the foregoing.
Notwithstanding the foregoing, the maximum amount of
Secured Obligations secured by the assets of any Grantor
which is a Subsidiary of the Borrower shall not in any
event exceed the maximum amount that may be so secured
under applicable federal and state laws relating to the
insolvency of debtors.
SECTION III REPRESENTATIONS AND WARRANTIES
To induce the Trustee to enter into the Indenture
and to induce the parties thereto to enter into the
Indenture, each Grantor hereby represents and warrants to
the Trustee that:
A. Representations in Purchase Agreement. In the
case of each Grantor, the representations and warranties
set forth in Section 1(a) of the Purchase Agreement as
they relate to such Grantor or to the documents to which
such Grantor is a party, each of which is hereby
incorporated herein by reference, are true and correct in
all material respects, and the Trustee shall be entitled
to rely on each of them as if they were fully set forth
herein.
B. Title; No Other Liens. Except for the security
interest granted to the Trustee pursuant to this
Agreement, the other Liens permitted to exist on the
Collateral by the Bank Credit Agreement and the
Indenture, and the Liens granted to the Administrative
Agent pursuant to the Senior Security and Pledge
Agreement, such Grantor owns each item of the Collateral
free and clear of any and all Liens or claims of others.
No effective financing statement or other public notice
with respect to all or any part of the Collateral is on
file or of record in any public office, except such as
have been filed in favor of the Administrative Agent or
the Trustee pursuant to this Agreement, the Senior
Security and Pledge Agreement or as are permitted by the
Bank Credit Agreement, the Indenture or as set forth on
Schedule 6.3 to the Bank Credit Agreement.
C. Perfected Liens. The security interest
granted pursuant to this Agreement (a) constitutes a
valid perfected security interest in all of the
Collateral (other than the Vehicles and other than
Pledged Notes, Instruments or Chattel Paper not required
to be delivered hereunder) in favor of the Trustee for
the benefit of the holders of the Notes (or, with respect
to Patents, Copyrights and registered trademarks or
trademark applications, will constitute perfected
security interests upon the recordation of the Trustee's
interest therein with the appropriate intellectual
property registry and upon the registration of
unregistered copyrights), as collateral security for such
Grantor's Secured Obligations, enforceable in accordance
with the terms hereof against all creditors of such
Grantor and any Persons purporting to purchase any
Collateral (other than the Vehicles and other than
Pledged Notes, Instruments or Chattel Paper not required
to be delivered hereunder) from such Grantor and (b) are
prior to all other Liens on the Collateral in existence
on the date hereof except for Liens permitted by the Bank
Credit Agreement or the Indenture; in each case, subject
to Liens or creditor claims created pursuant to the
Senior Security and Pledge Agreement.
D. Chief Executive Office. On the date hereof,
such Grantor's jurisdiction of organization and the
location of such Grantor's chief executive office or sole
place of business are specified on Schedule 4.
E. Inventory and Equipment. On the date hereof,
the Inventory and the Equipment (other than mobile goods)
are kept at the locations listed on Schedule 5.
F. Farm Products. None of the Collateral
constitutes, or is the Proceeds of, Farm Products.
G. Pledged Securities. 1. The shares of Pledged
Stock pledged by such Grantor hereunder constitute all
the issued and outstanding shares of all classes of the
Capital Stock of each Pledged Security Issuer which is a
Domestic Subsidiary (other than Bear Island Finance
Company II) owned by such Grantor and not more than 65%
of the Capital Stock of each Pledged Security Issuer
which is a Foreign Subsidiary owned by such Grantor.
2. All the shares of the Pledged Stock, Pledged
Partnership Interests and the Pledged LLC Interests
pledged by such Grantor have been duly and validly issued
and, to the extent applicable, are fully paid and
nonassessable.
3. The Pledged Partnership Interests pledged by
such Grantor constitute all the issued and outstanding
partnership interests of each Pledged Security Issuer
that is a partnership in which such Grantor has any
right, title or interest.
4. The Pledged LLC Interests pledged by such
Grantor constitute all the issued and outstanding equity
interests of each Pledged Security Issuer that is a
limited liability company in which such Grantor has any
right, title or interest.
5. As of the date hereof, to the best knowledge of
such Grantor, each of the Pledged Notes and the documents
comprising the Pledged Note Collateral constitutes the
legal, valid and binding obligation of the obligor with
respect thereto, enforceable in accordance with its
terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors'
rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing. As of
the date hereof, no Grantor has sent any notice of
default to the obligor under any Pledged Note or under
any Pledged Note Collateral and to the applicable
Grantor's knowledge, no state of facts exists which
constitutes, or with notice or the passage of time or
both would constitute, a default under the Pledged Notes
or the Pledged Note Collateral. As of the date hereof,
no Grantor has any knowledge of any offsets,
counterclaims or defenses to the obligor's obligations
under the Pledged Notes or the documents comprising the
Pledged Note Collateral.
6. Such Grantor is the owner of, and has title to,
the Pledged Securities pledged by it hereunder, free of
any and all Liens or options in favor of, or claims of,
any other Person, except the security interest created by
this Agreement and Liens permitted by the Bank Credit
Agreement or the Indenture.
7. Schedule 2 accurately reflects each Grantor's
partnership interests and equity interests in limited
liability companies pledged by such Grantor and held as
of the date hereof.
H. Receivables. 1. No amount payable to such
Grantor under or in connection with any Receivable is
evidenced by any Instrument or Chattel Paper in the
amount of more than $500,000 individually or $1,000,000
in the aggregate which has not been delivered to the
Trustee or the Administrative Agent.
2. None of the obligors on any Receivables is a
Governmental Authority, other than Receivables
aggregating not in excess of $500,000 unless the relevant
Grantor has taken the actions requested by the Trustee
which are required to cause the security interest of the
Trustee pursuant to this Agreement to be perfected,
including compliance with the Assignment of Claims Act,
if applicable.
3. The amounts represented by such Grantor to the
Lenders from time to time as owing to such Grantor in
respect of the Receivables will at such times be accurate
in all material respects.
I. Contracts. 1. No consent of any party (other
than such Grantor) to any Contract pledged hereunder is
required, or purports to be required, in connection with
the execution, delivery and performance of this
Agreement.
2. Each Contract is in full force and effect and
constitutes to the best knowledge of such Grantor with
respect to parties other than a Grantor, a valid and
legally enforceable obligation of the parties thereto,
subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors'
rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
3. To the best knowledge of such Grantor with
respect to parties other than a Grantor, no consent or
authorization of, filing with or other act by or in
respect of any Governmental Authority is required in
connection with the execution, delivery, performance,
validity or enforceability of any of the Contracts by any
party thereto other than those which have been duly
obtained, made or performed, are in full force and effect
and do not subject the scope of any such Contract to any
material adverse limitation, either specific or general
in nature.
4. The right, title and interest of such Grantor
in, to and under the Contracts are not subject to any
defenses, offsets, counterclaims or claims that, in the
aggregate, could reasonably be expected to have a
Material Adverse Effect.
5. Such Grantor has delivered to the Trustee a
complete and correct copy of each Contract, including all
amendments, supplements and other modifications thereto.
6. No amount payable to such Grantor under or in
connection with any Contract is evidenced by any
Instrument or Chattel Paper in excess of $500,000
individually, or $1,000,000 in the aggregate, which has
not been delivered to the Trustee or the Administrative
Agent.
7. None of the parties to any Contract under which
more than $500,000 is payable is a Governmental Authority
unless the relevant Grantor has taken the actions
requested by the Trustee which are required to cause the
security interest of the Trustee therein to be perfected,
including compliance with the Assignment of Claims Act,
if applicable.
J. Intellectual Property. 1. Schedule 6 lists
all Patents and all registrations and applications for
Copyrights and Trademarks owned by such Grantor in its
own name on the date hereof.
2. Except as set forth in Schedule 6, on the date
hereof, none of the Intellectual Property is the subject
of any licensing or franchise agreement pursuant to which
such Grantor is the licensor or franchisor.
K. Vehicles. The book value of all Vehicles
owned by all Grantors on the date hereof does not exceed
$250,000.
SECTION IV COVENANTS
Each Grantor covenants and agrees with the Trustee
that, from and after the date of this Agreement until the
Secured Obligations shall have been paid in full:
A. Covenants in Indenture. In the case of each
Grantor, the covenants set forth in Article Ten of the
Indenture as they relate to such Grantor or to related
documents to which such Grantor is a party, are each
hereby incorporated herein by reference, and the Trustee
shall be entitled to rely on each of them as if they were
fully set forth herein.
B. Delivery of Instruments and Chattel Paper. If
any amount in excess of $500,000 individually or
$1,000,000 in the aggregate payable under or in
connection with any of the Collateral shall be or become
evidenced by any Instrument or Chattel Paper, such
Instrument or Chattel Paper shall be, promptly upon
receipt thereof by such Grantor, delivered to the
Trustee, duly indorsed in a manner satisfactory to the
Trustee, to be held as Collateral pursuant to this
Agreement.
C. Maintenance of Insurance. 1. Such Grantor
will maintain, with financially sound and reputable
companies, insurance policies (i) insuring the Inventory,
Equipment and Vehicles against loss by fire, explosion,
theft and such other casualties as may be customary in
the business in which the Grantor is engaged insuring
such Grantor and the Trustee against liability for
personal injury and property damage relating to such
Inventory, Equipment and Vehicles, such policies to be in
such form and amounts and having such coverage as may be
customary in the business in which the Company is
engaged.
2. All such insurance shall (i) provide that no
cancellation, material reduction in amount or material
change in coverage thereof shall be effective until at
least 30 days after receipt by the Trustee of written
notice thereof, (ii) name the Trustee as additional
insured party or loss payee, (iii) if reasonably
requested by the Trustee, include a breach of warranty
clause and (iv) be reasonably satisfactory in all other
respects to the Trustee.
3. The Borrower shall deliver to the Trustee
annually a report of a reputable insurance broker with
respect to such insurance and such supplemental reports
with respect thereto as the Trustee may from time to time
reasonably request.
D. Maintenance of Perfected Security Interest;
Further Documentation. 1. Such Grantor shall maintain
the security interest created by this Agreement as a
perfected security interest having at least the priority
such security interest has as of the date hereof and
shall defend such security interest against the claims
and demands of all Persons whomsoever except for holders
of permitted Liens.
2. Such Grantor will furnish to the Trustee from
time to time statements and schedules further identifying
and describing the Collateral and such other reports in
connection with the Collateral as the Trustee may
reasonably request, all in reasonable detail.
3. At any time and from time to time, upon the
written request of the Trustee, and at the sole expense
of such Grantor, such Grantor will promptly and duly
execute and deliver, and have recorded, such further
instruments and documents and take such further actions
as the Trustee may reasonably request for the purpose of
obtaining or preserving the full benefits of this
Agreement and of the rights and powers herein granted,
including, without limitation, the filing of any
financing or continuation statements under the Uniform
Commercial Code (or other similar laws) in effect in any
jurisdiction with respect to the security interests
created hereby, other than foreign Intellectual Property
filings. If any amount payable to any Grantor under or in
connection with any of the Pledged Securities with
respect to the equity interests of such Grantor in the
Pledged Security Issuer thereof shall be or become
evidenced by any promissory note, other instrument or
chattel paper in excess of $500,000 individually or
$1,000,000 in the aggregate shall be promptly upon
receipt thereof by such Grantor delivered to the Trustee,
duly endorsed in a manner satisfactory to the Trustee, to
be held as Pledged Securities pursuant to this Agreement
other than any note, instrument or chattel paper
distributed as part of a Permitted Investment or a
Restricted Payment (as defined in the Bank Credit
Agreement) permitted to be made or received pursuant to
the Indenture or the Bank Credit Agreement, respectively.
4. Concurrently with the delivery to the Trustee
of each certificate representing one or more shares of
Pledged Stock to the Trustee, such Grantor shall deliver
an undated stock power covering such certificate, duly
executed in blank by such Grantor.
5. All Pledged Notes, when delivered, shall be
duly endorsed in blank. At the time of delivery of any
Pledged Notes, the applicable Grantor shall deliver the
originals of the documents comprising the Pledged Note
Collateral with respect to such Pledged Notes, together
with an assignment of mortgage or deed of trust, as
applicable, in a form which is recordable in the county
records where the real property covered by such mortgage
or deed of trust is located, duly executed by such
Grantor and acknowledged by a notary public.
E. Changes in Locations, Name, etc. Such Grantor
will not, except upon 15 days' prior written notice to
the Trustee and upon delivery to the Trustee of (a) all
additional executed financing statements and other
documents reasonably requested by the Trustee to maintain
the validity, perfection and priority of the security
interests provided for herein and (b) if applicable, a
written supplement to Schedule 5 showing any additional
location at which Inventory or Equipment shall be kept:
(i) permit any of the Inventory or Equipment to be
kept at a location other than those listed on Schedule 5;
(ii) change the location of its chief executive
office or sole place of business from that referred to in
Section III(D); or
(iii) change its name, identity or corporate
structure to such an extent that any financing statement
filed by the Trustee in connection with this Agreement
would become misleading.
F. Notices. Such Grantor will advise the Trustee
promptly, in reasonable detail, of:
1. any Lien (other than security interests created
hereby or pursuant to the Senior Security and Pledge
Agreement, or Liens permitted under the Bank Credit
Agreement or the Indenture) on any of the Collateral
which would adversely affect the ability of the Trustee
to exercise any of its remedies hereunder; and
2. of the occurrence of any other event which
could reasonably be expected to have a material adverse
effect on the aggregate value of the Collateral or on the
security interests created hereby other than Liens
permitted pursuant to this Agreement, the Bank Credit
Agreement or by the Indenture.
G. Pledged Securities. 1. If such Grantor shall
become entitled to receive or shall receive any
certificate (including, without limitation, any
certificate representing a stock dividend or a
distribution in connection with any reclassification,
increase or reduction of capital or any certificate
issued in connection with any reorganization), option or
rights in respect of the Capital Stock of any Pledged
Security Issuer, whether in addition to, in substitution
of, as a conversion of, or in exchange for, any shares of
the Pledged Stock, the Pledged Partnership Interests or
the Pledged LLC Interests or otherwise in respect
thereof, such Grantor shall accept the same as the agent
of the Trustee, hold the same in trust for the Trustee
and deliver the same forthwith to the Trustee in the
exact form received, duly indorsed by such Grantor to the
Trustee, if required, together with an undated stock
power covering such certificate duly executed in blank by
such Grantor and with, if the Trustee so requests,
signature guaranteed, to be held by the Trustee, subject
to the terms hereof, the Intercreditor Agreement and the
Senior Security and Pledge Agreement, as additional
collateral security for the Secured Obligations. Any
sums paid upon or in respect of the Pledged Securities
upon the liquidation or dissolution of any Pledged
Security Issuer shall be paid over to the Trustee to be
held by it hereunder as additional collateral security
for the Secured Obligations, and in case any distribution
of capital shall be made on or in respect of the Pledged
Securities or any property shall be distributed upon or
with respect to the Pledged Securities, in each case
pursuant to the recapitalization or reclassification of
the capital of any Pledged Security Issuer or pursuant to
the reorganization thereof, the property so distributed
shall, unless otherwise subject to a perfected security
interest in favor of the Trustee, be delivered to the
Trustee to be held by it hereunder as additional
collateral security for the Secured Obligations. If any
sums of money or property so paid or distributed in
respect of the Pledged Securities (other than
distributions permitted to be made or received pursuant
to the Bank Credit Agreement or the Indenture) shall be
received by such Grantor, such Grantor shall, until such
money or property is paid or delivered to the Trustee,
hold such money or property in trust for the Trustee,
segregated from other funds of such Grantor, as
additional collateral security for the Secured
Obligations.
2. Except as otherwise permitted by the Bank
Credit Agreement, so long as such Bank Credit Agreement
is in effect, or the Indenture, without the prior written
consent of the Trustee (which consent will not be
unreasonably withheld or delayed), such Grantor will not
(i) vote to enable, or take any other action to permit,
any Pledged Security Issuer to issue any stock or other
equity securities of any nature or to issue any other
securities convertible into or granting the right to
purchase or exchange for any stock or other equity
securities of any nature of any Pledged Security Issuer
except the issuance to Grantor of equity securities that
constitute Collateral, (ii) sell, assign, transfer,
exchange, or otherwise dispose of, or grant any option
with respect to, the Pledged Securities or Proceeds
thereof (except pursuant to a transaction not prohibited
or expressly permitted by the Bank Credit Agreement or
the Indenture), (iii) create, incur or permit to exist
any Lien or option in favor of, or any claim of any
Person with respect to, any of the Pledged Securities or
Proceeds thereof, or any interest therein, except for the
security interests created by this Agreement and the
Senior Security and Pledge Agreement or (iv) enter into
any agreement or undertaking restricting the right or
ability of such Grantor to sell, assign or transfer any
of the Pledged Securities or Proceeds thereof.
3. In the case of each Grantor which is a Pledged
Security Issuer, such Pledged Security Issuer agrees that
(i) it will be bound by the terms of this Agreement
relating to the Pledged Securities issued by it and will
comply with such terms insofar as such terms are
applicable to it, (ii) it will notify the Trustee
promptly in writing of the occurrence of any of the
events described in Section IV(G)(1) with respect to the
Pledged Securities issued by it and (iii) the terms of
Sections V(C)(3) and V(G) shall apply to it, mutatis
mutandis, with respect to all actions that may be
required of it pursuant to Section V(C)(3) or V(G) with
respect to the Pledged Securities issued by it.
4. With respect to the Pledged Notes, the Grantors
shall (i) not extinguish, cancel or reduce the
indebtedness evidenced by the Pledged Notes (other than
the Intercompany Notes) except as a result of payment by
the obligors thereunder, (ii) not amend or permit the
amendment of such Pledged Notes or the Pledged Note
Collateral, or release any of the property encumbered by
the Pledged Note Collateral and (iii) enforce or secure
the performance of each and every obligation, term,
covenant, condition and agreements relating to the
Pledged Notes and the Pledged Note Collateral and not
waive or compromise any rights it may have thereunder
except, with respect to the foregoing clauses (i), (ii)
and (iii), in each case other than (A) in the ordinary
course of business or (B) as permitted by the Indenture.
5. With respect to the Pledged LLC Interests and
the Pledged Partnership Interests, (i) perform and comply
in all material respects with all terms and provisions of
each limited liability company agreement and each
partnership agreement then in effect with respect thereto
and required to be performed or complied with by it and
(ii) enforce each partnership agreement and limited
liability company agreement then in effect in accordance
in all material respects with its terms.
H. Receivables. 1. Other than in the ordinary
course of business consistent with its past practice,
such Grantor will not (i) grant any extension of the time
of payment of any Receivable, (ii) compromise or settle
any Receivable for less than the full amount thereof,
(iii) release, wholly or partially, any Person liable for
the payment of any Receivable, (iv) allow any credit or
discount whatsoever on any Receivable or (v) amend,
supplement or modify any Receivable in any manner that
could reasonably be expected to adversely affect the
value thereof.
2. Such Grantor will deliver to the Trustee a copy
of each material demand, notice or document received by
it that questions or calls into doubt the validity or
enforceability of more than 5% of the aggregate amount of
the then outstanding Receivables.
I. Contracts. 1. Such Grantor will perform and
comply in all material respects with all its obligations
under the Contracts.
2. Such Grantor will not amend, modify, terminate
or waive any provision of any Contract in any manner
which could reasonably be expected to cause a Material
Adverse Effect.
3. Subject to Subsection 2 above, such Grantor
will exercise promptly and diligently each and every
material right which it may have under each Contract
(other than any right of termination).
4. Such Grantor will deliver to the Trustee a copy
of each material demand, notice or document received by
it relating in any way to any material Contract that
questions the validity or enforceability of such
Contract.
J. Intellectual Property. 1. Such Grantor
(either itself or through licensees) will (i) continue to
use each material Trademark on each and every trademark
class of goods applicable to its current line as
reflected in its current catalogs, brochures and price
lists in order to maintain such Trademark in full force
free from any claim of abandonment for non-use, (ii)
maintain as in the past the quality of products and
services offered under such Trademark, (iii) use such
Trademark with the appropriate notice of registration and
all other notices and legends required by applicable
material Requirements of Law, (iv) not adopt or use any
xxxx which is confusingly similar or a colorable
imitation of such Trademark unless the Trustee shall
obtain a perfected security interest in such xxxx
pursuant to this Agreement, and (v) not (and not
knowingly permit any licensee or sublicensee thereof to)
do any act or knowingly omit to do any act whereby such
Trademark may become invalidated or impaired in any way.
2. Such Grantor (either itself or through
licensees) will not do any act, or omit to do any act,
whereby any material Patent may become forfeited,
abandoned or dedicated to the public.
3. Such Grantor (either itself or through
licensees) (i) will employ each material Copyright and
(ii) will not (and will not knowingly permit any licensee
or sublicensee thereof to) do any act or knowingly omit
to do any act whereby any material portion of the
Copyrights may become invalidated or otherwise impaired.
Such Grantor will not (either itself or through
licensees) do any act whereby any material portion of the
Copyrights may fall into the public domain.
4. Such Grantor (either itself or through
licensees) will not do any act that knowingly uses any
material Intellectual Property to infringe the
intellectual property rights of any other Person.
5. Such Grantor will notify the Trustee promptly
if it knows, or has reason to know, that any application
or registration relating to any material Intellectual
Property may become forfeited, abandoned or dedicated to
the public, or of any adverse determination or
development (including, without limitation, the
institution of, or any such determination or development
in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or
any court or tribunal in any country) regarding such
Grantor's ownership of, or the validity of, any material
Intellectual Property or such Grantor's right to register
the same or to own and maintain the same.
6. Whenever such Grantor, either by itself or
through any agent, employee, licensee or designee, shall
file an application for the registration of any
Intellectual Property with the United States Patent and
Trademark Office, the United States Copyright Office or
any similar office or agency in any other country or any
political subdivision thereof, such Grantor shall report
such filing to the Trustee within five Business Days
after the last day of the fiscal quarter in which such
filing occurs with respect to filings in the United
States and, with respect to filings outside the United
States, within five Business Days after the last day of
the fiscal quarter in which the Grantor is notified of
such filing by its foreign agent. Upon request of the
Trustee, such Grantor shall execute and deliver, and have
recorded, any and all agreements, instruments, documents,
and papers as the Trustee may request to evidence the
Trustee's security interest in any Copyright, Patent or
Trademark and the goodwill and general intangibles of
such Grantor relating thereto or represented thereby.
7. Such Grantor will take all reasonable and
necessary steps, including, without limitation, in any
proceeding before the United States Patent and Trademark
Office, the United States Copyright Office or any similar
office or agency in any other country or any political
subdivision thereof, to maintain and pursue each
application (and to obtain the relevant registration) and
to maintain each registration of the material
Intellectual Property, including, without limitation,
filing of applications for renewal, affidavits of use and
affidavits of incontestability.
8. In the event that any material Intellectual
Property is infringed, misappropriated or diluted by a
third party, such Grantor shall (i) take such actions as
such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property and
(ii) if such Intellectual Property is of material
economic value, promptly notify the Trustee after it
learns thereof and xxx for infringement, misappropriation
or dilution, to seek injunctive relief where appropriate
and to recover any and all damages for such infringement,
misappropriation or dilution.
K. Vehicles. If the aggregate book value of all
Vehicles owned by all Grantors exceed $250,000, the
Company shall promptly notify the Trustee thereof and the
Company will cause all actions to be taken as may be
required by the Trustee to cause the security interest of
the Trustee to be perfected on all such Vehicles as
requested by the Trustee.
SECTION V REMEDIAL PROVISIONS
A. Certain Matters Relating to Receivables. 1.
The Trustee shall have the right to make test
verifications of the Receivables in any manner and
through any medium that it reasonably considers
advisable, and each Grantor shall furnish all such
assistance and information as the Trustee may require in
connection with such test verifications. At any time and
from time to time, upon the Trustee's reasonable request
and at the expense of the relevant Grantor, such Grantor
shall cause independent public accountants or others
satisfactory to the Trustee to furnish to the Trustee
reports showing reconciliations, aging and test
verifications of, and trial balances for, the
Receivables, provided, that the Trustee may not make such
a request more than once per calendar year when no Event
of Default is in existence or more than four times per
calendar year when an Event of Default is in existence;
provided further that if the Administrative Agent has
exercised any such rights pursuant to the Senior Pledge
and Security Agreement, such exercise will count against
the number of such requests allowed to be made by the
Trustee and such Grantor will provide the Trustee with
copies of any such reports requested by the
Administrative Agent pursuant to this sentence.
2. The Trustee hereby authorizes each Grantor to
collect such Grantor's Receivables, subject to the
Trustee's direction and control, and the Trustee may
curtail or terminate said authority at any time after the
occurrence and during the continuance of an Event of
Default. If required by the Trustee at any time after
the occurrence and during the continuance of an Event of
Default, any payments of Receivables, when collected by
any Grantor, (i) shall be forthwith (and, in any event,
within two Business Days) deposited by such Grantor in
the exact form received, duly indorsed by such Grantor to
the Trustee if required, in a Collateral Account
maintained under the sole dominion and control of the
Trustee, subject to withdrawal by the Trustee as provided
in Section 5(E), and (ii) until so turned over, shall be
held by such Grantor in trust for the Trustee, segregated
from other funds of such Grantor. Each such deposit of
Proceeds of Receivables after the occurrence and during
the continuance of an Event of Default shall be
accompanied by a report identifying in reasonable detail
the nature and source of the payments included in the
deposit.
3. At the Trustee's reasonable request, each
Grantor shall deliver to the Trustee all original and
other documents evidencing, and relating to, the
agreements and transactions which gave rise to the
Receivables, including, without limitation, all original
orders, invoices and shipping receipts, provided, that
only copies (or other than originals) of the foregoing
documents shall be required to be delivered in the
absence of an Event of Default.
B. Communications with Obligors; Grantors Remain
Liable. 1. The Trustee in its own name or in the name
of others may at any time after the occurrence and during
the continuance of an Event of Default communicate with
obligors under the Receivables and parties to the
Contracts to verify with them to the Trustee's
satisfaction the existence, amount and terms of any
Receivables or Contracts.
2. Upon the request of the Trustee at any time
after the occurrence and during the continuance of an
Event of Default, each Grantor shall notify obligors on
the Receivables and parties to the Contracts that a
security interest in the Receivables and the Contracts
has been assigned to the Trustee and that payments in
respect thereof shall be made directly to the Trustee.
3. Anything herein to the contrary
notwithstanding, each Grantor shall remain liable under
each of the Receivables and Contracts to observe and
perform all the conditions and obligations to be observed
and performed by it thereunder, all in accordance with
the terms of any agreement giving rise thereto in the
case of Receivables or such Contract. The Trustee shall
not have any obligation or liability under any Receivable
(or any agreement giving rise thereto) or Contract by
reason of or arising out of this Agreement or the receipt
by the Trustee of any payment relating thereto, nor shall
the Trustee be obligated in any manner to perform any of
the obligations of any Grantor under or pursuant to any
Receivable (or any agreement giving rise thereto) or
Contract, to make any payment, to make any inquiry as to
the nature or the sufficiency of any payment received by
it or as to the sufficiency of any performance by any
party thereunder, to present or file any claim, to take
any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to it
or to which it may be entitled at any time or times.
C. Pledged Securities. 1. Unless an Event of
Default shall have occurred and be continuing and the
Trustee shall have given notice to the relevant Grantor
of the Trustee's intent to exercise its corresponding
rights pursuant to Section V(C)(2), each Grantor shall be
permitted to receive all dividends paid in respect of the
Pledged Stock and all payments made in the ordinary
course of business in respect of the Pledged Notes and
all distributions in respect of the Pledge Partnership
Interests and Pledged LLC Interests, to the extent
permitted in the Bank Credit Agreement or the Indenture,
and to exercise all voting and corporate rights with
respect to the Pledged Securities; provided, however,
that no vote shall be cast or corporate right exercised
or other action taken which, in the Trustee's reasonable
judgment, would materially impair the Collateral or which
would be inconsistent with or result in any violation of
any provision of this Agreement or any other Collateral
Document.
2. If an Event of Default shall occur and be
continuing and the Trustee gives notice of its intent to
exercise such rights to the relevant Grantor or Grantors,
(i) the Trustee shall have the right to receive any and
all cash dividends, payments or other Proceeds paid in
respect of the Pledged Securities and make application
thereof to the Secured Obligations in such order as the
Trustee may determine and as permitted by law, and (ii)
any or all of the Pledged Securities shall be registered
in the name of the Trustee or its nominee, and the
Trustee or its nominee may thereafter exercise (x) all
voting, corporate and other rights pertaining to such
Pledged Securities at any meeting of shareholders of the
relevant Pledged Security Issuer or Issuers or otherwise
and (y) any and all rights of conversion, exchange and
subscription and any other rights, privileges or options
pertaining to such Pledged Securities as if it were the
absolute owner thereof (including, without limitation,
the right to exchange at its discretion any and all of
the Pledged Securities upon the merger, consolidation,
reorganization, recapitalization or other fundamental
change in the corporate structure of any Pledged Security
Issuer, or upon the exercise by any Grantor or the
Trustee of any right, privilege or option pertaining to
such Pledged Securities, and in connection therewith, the
right to deposit and deliver any and all of the Pledged
Securities with any committee, depositary, transfer
agent, registrar or other designated agency upon such
terms and conditions as the Trustee may determine), all
without liability except to account for property actually
received by it and except to the extent resulting from
the gross negligence or willful misconduct of the
Trustee, but the Trustee shall have no duty to any
Grantor to exercise any such right, privilege or option
and shall not be responsible for any failure to do so or
delay in so doing.
3. Each Grantor hereby authorizes and instructs
each Pledged Security Issuer of any Pledged Securities
pledged by such Grantor hereunder to (i) comply with any
instruction received by it from the Trustee in writing
that (x) states that an Event of Default has occurred and
is continuing and (y) is otherwise in accordance with the
terms of this Agreement, without any other or further
instructions from such Grantor, and each Grantor agrees
that each Pledged Security Issuer shall be fully
protected in so complying, and (ii) upon the occurrence
and during the continuance of an Event of Default, unless
otherwise expressly permitted hereby, pay any dividends
or other payments with respect to the Pledged Securities
directly to the Trustee.
D. Proceeds to be Turned Over To Trustee. In
addition to the rights of the Trustee specified in
Section V(A) with respect to payments of Receivables, if
an Event of Default shall occur and be continuing, all
Proceeds received by any Grantor consisting of cash,
checks and other similar items shall be held by such
Grantor in trust for the Trustee, segregated from other
funds of such Grantor, and shall, forthwith upon receipt
by such Grantor, be turned over to the Trustee in the
exact form received by such Grantor (duly indorsed by
such Grantor to the Trustee, if required). All Proceeds
received by the Trustee hereunder shall be held by the
Trustee in a Collateral Account maintained under its sole
dominion and control. All Proceeds while held by the
Trustee in a Collateral Account (or by such Grantor in
trust for the Trustee) shall continue to be held as
collateral security for all the Secured Obligations and
shall not constitute payment thereof until applied as
provided in Section V(D).
E. Application of Proceeds. The provisions of
Section 506 of the Indenture as it relates to application
of proceeds is hereby incorporated herein by reference,
and the Trustee shall be entitled to rely on each of them
as if they were fully set forth herein.
F. Code and Other Remedies. If an Event of
Default shall occur and be continuing, the Trustee may
exercise, in addition to all other rights and remedies
granted to them in this Agreement and in any other
instrument or agreement securing, evidencing or relating
to the Secured Obligations, and as permitted by the
Intercreditor Agreement, all rights and remedies of a
secured party under the New York UCC or any other
applicable law. Without limiting the generality of the
foregoing, the Trustee, without demand of performance or
other demand, presentment, protest, advertisement or
notice of any kind (except any notice required by law
referred to below) to or upon any Grantor or any other
Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may, to
the extent permitted by law and the Intercreditor
Agreement, in such circumstances forthwith collect,
receive, appropriate and realize upon the Collateral, or
any part thereof, and/or may forthwith sell, lease,
assign, give option or options to purchase, or otherwise
dispose of and deliver the Collateral or any part thereof
(or contract to do any of the foregoing), in one or more
parcels at public or private sale or sales, at any
exchange, broker's board or office of the Trustee or
elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without
assumption of any credit risk. The Trustee shall have
the right upon any such public sale or sales, and, to the
extent permitted by law and the Intercreditor Agreement,
upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any
right or equity of redemption in any Grantor, which right
or equity is waived and released upon consummation of
such sale. Each Grantor further agrees, at the Trustee's
request, to assemble the Collateral and make it available
to the Trustee at places which the Trustee shall
reasonably select, whether at such Grantor's premises or
elsewhere. The Trustee shall apply the net proceeds of
any action taken by it pursuant to this Section V(F),
after deducting all reasonable costs and expenses of
every kind incurred in connection therewith or incidental
to the care or safekeeping of any of the Collateral or in
any way relating to the Collateral or the rights of the
Trustee hereunder, including, without limitation,
reasonable attorneys' fees and disbursements, to the
payment in whole or in part of the Secured Obligations,
in such order as the Trustee may elect and as permitted
by law, and only after such application and after the
payment by the Trustee of any other amount required by
any provision of law, including, without limitation,
Section 9-504(1)(c) of the New York UCC, need the Trustee
account for the surplus, if any, to any Grantor. To the
extent permitted by applicable law, each Grantor waives
all claims, damages and demands it may acquire against
the Trustee arising out of the exercise by it of any
rights hereunder, except to the extent arising out of
negligence or bad faith of the Trustee. If any notice of
a proposed sale or other disposition of Collateral shall
be required by law, such notice shall be deemed
reasonable and proper if given at least 10 days before
such sale or other disposition.
G. Registration Rights. 1. If the Trustee shall
determine to exercise its right to sell any or all of the
Pledged Securities pursuant to Section V(F), and if in
the reasonable opinion of the Trustee it is necessary or
advisable to have the Pledged Securities or that portion
thereof to be sold, registered under the provisions of
the Securities Act, the relevant Grantor will cause the
Pledged Security Issuer thereof to (i) execute and
deliver, and cause the directors and officers of such
Pledged Security Issuer to execute and deliver, all such
instruments and documents, and do or cause to be done all
such other acts as may be, in the reasonable opinion of
the Trustee, necessary or advisable to register the
Pledged Securities or that portion thereof to be sold,
under the provisions of the Securities Act, (ii) use its
reasonable efforts to cause the registration statement
relating thereto to become effective and to remain
effective for a period of one year from the date of the
first public offering of the Pledged Securities, or that
portion thereof to be sold, and (iii) make all amendments
thereto and/or to the related prospectus which, in the
reasonable opinion of the Trustee, are necessary or
advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto.
Each Grantor agrees to cause such Pledged Security Issuer
to comply with the provisions of the securities or "Blue
Sky" laws of any and all jurisdictions of the United
States which the Trustee shall designate and to make
available to its security holders, as soon as
practicable, an earnings statement (which need not be
audited) which will satisfy the provisions of Section
11(a) of the Securities Act.
2. Each Grantor recognizes that the Trustee may be
unable to effect a public sale of any or all the Pledged
Securities, by reason of certain prohibitions contained
in the Securities Act and applicable state securities
laws or otherwise, and may be compelled to resort to one
or more private sales thereof to a restricted group of
purchasers which will be obliged to agree, among other
things, to acquire such securities for their own account
for investment and not with a view to the distribution or
resale thereof. Each Grantor acknowledges and agrees
that any such private sale may result in prices and other
terms less favorable than if such sale were a public sale
and, notwithstanding such circumstances, agrees that any
such private sale shall be deemed to have been made in a
commercially reasonable manner. The Trustee shall be
under no obligation to delay a sale of any of the Pledged
Securities for the period of time necessary to permit the
Pledged Security Issuer thereof to register such
securities for public sale under the Securities Act, or
under applicable state securities laws of the United
States, even if such Pledged Security Issuer would agree
to do so.
3. Each Grantor agrees to use its reasonable
efforts to do or cause to be done all such other acts as
may be necessary to make such sale or sales of all or any
portion of the Pledged Securities pursuant to this
Section V(G) valid and binding and in compliance with any
and all other applicable Requirements of Law. Each
Grantor further agrees that a breach of any of the
covenants contained in this Section V(G) will cause
irreparable injury to the Trustee, that the Trustee have
no adequate remedy at law in respect of such breach and,
as a consequence, that each and every covenant contained
in this Section V(G) shall be specifically enforceable
against such Grantor, and such Grantor hereby waives and
agrees not to assert any defenses against an action for
specific performance of such covenants.
H. Waiver; Deficiency. Each Grantor waives and
agrees not to assert any rights or privileges which it
may acquire under Section 9-112 of the New York UCC.
Each Grantor shall remain liable for any deficiency if
the proceeds of any sale or other disposition of the
Collateral are insufficient to pay its Secured
Obligations and the reasonable fees and disbursements of
any attorneys employed by the Trustee to collect such
deficiency.
SECTION VI THE TRUSTEE
A. Trustee's Appointment as Attorney-in-Fact, etc.
1. Each Grantor hereby irrevocably constitutes and
appoints the Trustee and any officer or agent thereof,
with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and
authority in the place and stead of such Grantor and in
the name of such Grantor or in its own name, for the
purpose of carrying out the terms of this Agreement, to
take any and all appropriate action and to execute any
and all documents and instruments which may be necessary
or desirable to accomplish the purposes of this
Agreement, and, without limiting the generality of the
foregoing, each Grantor hereby gives the Trustee the
power and right, on behalf of such Grantor, without
notice to or assent by such Grantor, to do any or all of
the following, in each case, subject to the last sentence
of this Section VI(A):
(i) in the name of such Grantor or its own name, or
otherwise, take possession of and indorse and collect any
checks, drafts, notes, acceptances or other instruments
for the payment of moneys due under any Receivable or
Contract or with respect to any other Collateral and file
any claim or take any other action or proceeding in any
court of law or equity or otherwise deemed appropriate by
the Trustee for the purpose of collecting any and all
such moneys due under any Receivable or Contract or with
respect to any other Collateral whenever payable;
(ii) in the case of any Intellectual Property,
execute and deliver, and have recorded, any and all
agreements, instruments, documents and papers as the
Trustee may request to evidence the Trustee's and the
Trustee's security interests in such Intellectual
Property and the goodwill and General Intangibles of such
Grantor relating thereto or represented thereby;
(iii) pay or discharge taxes and Liens levied or
placed on or threatened against the Collateral, effect
any repairs or any insurance called for by the terms of
this Agreement and pay all or any part of the premiums
therefor and the costs thereof;
(iv) execute, in connection with any sale provided
for in Section V(F) or V(G), any indorsements,
assignments or other instruments of conveyance or
transfer with respect to the Collateral; and
(v) (a) direct any party liable for any payment
under any of the Collateral to make payment of any and
all moneys due or to become due thereunder directly to
the Trustee or as the Trustee shall direct; (b) ask or
demand for, collect, and receive payment of and receipt
for, any and all moneys, claims and other amounts due or
to become due at any time in respect of or arising out of
any Collateral; (c) sign and indorse any invoices,
freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection
with any of the Collateral; (d) commence and prosecute
any suits, actions or proceedings at law or in equity in
any court of competent jurisdiction to collect the
Collateral or any portion thereof and to enforce any
other right in respect of any Collateral; (e) defend any
suit, action or proceeding brought against such Grantor
with respect to any Collateral; (f) settle, compromise or
adjust any such suit, action or proceeding and, in
connection therewith, give such discharges or releases as
the Trustee may deem appropriate; (g) assign any
Copyright, Patent or Trademark (along with the goodwill
of the business to which any such Trademark pertains),
throughout the world for such term or terms, on such
conditions, and in such manner, as the Trustee shall in
its sole discretion determine subject, however, to
licenses thereto issued by the Grantor to the extent
permitted hereunder; and (h) generally, sell, transfer,
pledge and make any agreement with respect to or
otherwise deal with any of the Collateral as fully and
completely as though the Trustee were the absolute owner
thereof for all purposes, and do, at the Trustee's option
and such Grantor's expense, at any time, or from time to
time, all acts and things which the Trustee deems
necessary to protect, preserve or realize upon the
Collateral and the Trustee's and the Trustee's security
interests therein and to effect the intent of this
Agreement, all as fully and effectively as such Grantor
might do.
Anything in this Section VI(A) to the contrary
notwithstanding, the Trustee agrees that it will not
exercise any rights under the power of attorney provided
for in this Section VI(A) unless an Event of Default
shall have occurred and be continuing.
2. If any Grantor fails to perform or comply with
any of its agreements contained herein, the Trustee, at
its option, but without any obligation so to do, may
perform or comply, or otherwise cause performance or
compliance, with such agreement.
3. The reasonable out-of-pocket expenses of the
Trustee incurred in connection with actions undertaken as
provided in this Section VI(A), together with interest
thereon at a rate per annum equal to the rate per annum
at which interest would then be payable pursuant to the
provisions of the Indenture, from the date of payment by
the Trustee to the date reimbursed by the relevant
Grantor, shall be payable by such Grantor to the Trustee
on demand.
4. Each Grantor hereby ratifies all that said
attorneys shall lawfully do or cause to be done by virtue
hereof. All powers, authorizations and agencies
contained in this Agreement are coupled with an interest
and are irrevocable until this Agreement is terminated
and the security interests created hereby are released in
accordance with the terms hereof.
B. Duty of Trustee. The Trustee's sole duty with
respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under
Section 9-207 of the New York UCC or otherwise, shall be
to deal with it in the same manner as the Trustee deals
with similar property for its own account. Neither the
Trustee nor any of their respective officers, directors,
employees or agents shall be liable for failure to
demand, collect or realize upon any of the Collateral or
for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral
upon the request of any Grantor or any other Person or to
take any other action whatsoever with regard to the
Collateral or any part thereof. The powers conferred on
the Trustee hereunder are solely to protect the Trustee's
interests in the Collateral and shall not impose any duty
upon the Trustee to exercise any such powers. The
Trustee shall be accountable only for amounts that they
actually receive as a result of the exercise of such
powers, and neither they nor any of their officers,
directors, employees or agents shall be responsible to
any Grantor for any act or failure to act hereunder,
except for their own gross negligence or willful
misconduct.
C. Execution of Financing Statements. Pursuant to
Section 9-402 of the New York UCC and any other
applicable law, each Grantor authorizes the Trustee to
file or record financing statements and other filing or
recording documents or instruments with respect to the
Collateral without the signature of such Grantor in such
form and in such offices as the Trustee reasonably
determines appropriate to perfect the security interests
of the Trustee under this Agreement. A photographic or
other reproduction of this Agreement shall be sufficient
as a financing statement or other filing or recording
document or instrument for filing or recording in any
jurisdiction.
D. Authority of Trustee. Each Grantor
acknowledges that the rights and responsibilities of the
Trustee under this Agreement with respect to any action
taken by the Trustee or the exercise or non-exercise by
the Trustee of any option, voting right, request,
judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as
between the Trustee and the holders of the Notes, be
governed by the Indenture and the Intercreditor
Agreement, but, as between the Trustee and the Grantors,
the Trustee shall be conclusively presumed to be acting
as trustee for the holders of the Notes pursuant to the
Indenture with full and valid authority so to act or
refrain from acting, and no Grantor shall be under any
obligation, or entitlement, to make any inquiry
respecting such authority.
SECTION VII MISCELLANEOUS
A. Amendments in Writing. None of the terms or
provisions of this Agreement may be waived, amended,
supplemented or otherwise modified except in accordance
with the provisions of the Indenture and the
Intercreditor Agreement.
B. Notices. All notices, requests and demands to
or upon the Trustee or any Grantor hereunder shall be
effected in the manner provided for in Section 105 of the
Indenture and subsection 9.2 of the Bank Credit
Agreement, respectively.
C. No Waiver by Course of Conduct; Cumulative
Remedies. The Trustee shall not by any act (except by a
written instrument pursuant to Section VII(A)), delay,
indulgence, omission or otherwise be deemed to have
waived any right or remedy hereunder. No failure to
exercise, nor any delay in exercising, on the part of the
Trustee, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. A
waiver by the Trustee of any right or remedy hereunder on
any one occasion shall not be construed as a bar to any
right or remedy which the Trustee would otherwise have on
any future occasion. The rights and remedies herein
provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any other rights or
remedies provided by law.
D. Enforcement Expenses; Indemnification. 1. Each
Grantor agrees to pay or reimburse the Trustee for all
its reasonable out-of-pocket costs and expenses incurred
in collecting against such Grantor or otherwise enforcing
or preserving any rights under this Agreement and the
other Collateral Documents to which such Grantor is a
party, including, without limitation, the reasonable fees
and reasonable disbursements of counsel (including the
allocated fees and expenses of in-house counsel) to the
Trustee.
2. Each Grantor agrees to pay, and to save the
Trustee harmless from, any and all liabilities with
respect to, or resulting from any delay in paying, any
and all stamp, excise, sales or other taxes which may be
payable or determined to be payable with respect to any
of the Collateral or in connection with any of the
transactions contemplated by this Agreement.
3. Each Grantor agrees to pay, and to save the
Trustee harmless from, any and all liabilities,
obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of
this Agreement to the extent that such Grantor would be
required to do so pursuant to Section 606 of the
Indenture.
4. The agreements in this Section VII(D) shall
survive repayment of the Secured Obligations.
E. Successors and Assigns. This Agreement shall
be binding upon the successors and assigns of each
Grantor and shall inure to the benefit of the Trustee and
their respective permitted successors and assigns;
provided that no Grantor may assign, transfer or delegate
any of its rights or obligations under this Agreement
without the prior written consent of the Trustee.
F. Counterparts. This Agreement may be executed
by one or more of the parties to this Agreement on any
number of separate counterparts (including by telecopy),
and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
G. Severability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such
provision in any other jurisdiction.
H. Section Headings. The Section headings used in
this Agreement are for convenience of reference only and
are not to affect the construction hereof or be taken
into consideration in the interpretation hereof.
I. Integration. This Agreement and the other
Collateral Documents represent the agreement of the
Grantors and the Trustee with respect to the subject
matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by the
Trustee relative to subject matter hereof and thereof not
expressly set forth or referred to herein or in the other
Collateral Documents.
J. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.
K. Submission To Jurisdiction; Waivers. Each
Grantor hereby irrevocably and unconditionally:
1. submits for itself and its property in any
legal action or proceeding relating to this Agreement and
the other Collateral Documents to which it is a party, or
for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general
jurisdiction of the Courts of the State of New York, the
courts of the United States of America for the Southern
District of New York, and appellate courts from any
thereof;
2. consents that any such action or proceeding may
be brought in such courts and waives any objection that
it may now or hereafter have to the venue of any such
action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court
and agrees not to plead or claim the same;
3. agrees that service of process in any such
action or proceeding may be effected by mailing a copy
thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to
such Grantor at its address referred to in Section VII(B)
or at such other address of which the Trustee shall have
been notified in the manner described in Section VII(B);
4. agrees that nothing herein shall affect the
right to effect service of process in any other manner
permitted by law or shall limit the right to xxx in any
other jurisdiction; and
5. waives, to the maximum extent not prohibited by
law, any right it may have to claim or recover in any
legal action or proceeding referred to in this Section
any special, exemplary, punitive or consequential
damages.
L. Acknowledgements. Each Grantor hereby
acknowledges that:
1. it has been advised by counsel in the
negotiation, execution and delivery of this Agreement and
the other Collateral Documents to which it is a party;
and
2. the Trustee has no fiduciary relationship with
or fiduciary duty to any Grantor arising out of or in
connection with this Agreement or any of the other
Collateral Documents.
M. WAIVER OF JURY TRIAL. EACH GRANTOR AND THE
TRUSTEE BY ITS ACCEPTANCE HEREOF HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
N. Additional Grantors. Each Restricted
Subsidiary of the Company that is required to become a
Guarantor pursuant to the Indenture shall become a
Guarantor for all purposes of this Agreement upon
execution and delivery by such Restricted Subsidiary of
an Assumption Agreement in the form of Annex 1 hereto.
O. Releases. (a) At such time as the other
Secured Obligations shall have been paid in full, the
Collateral shall automatically be released from the Liens
created hereby, and this Agreement and all obligations
(other than those expressly stated to survive such
termination) of the Trustee and each Grantor hereunder
shall automatically terminate, all without delivery of
any instrument or performance of any act by any party,
and all rights to the Collateral shall revert to the
Grantors. At the request and sole expense of any Grantor
following any such termination, the Trustee shall deliver
to such Grantor any Collateral held by the Trustee
hereunder, and execute and deliver to such Grantor such
documents as such Grantor shall reasonably request to
evidence such termination and release.
(b) If any of the Collateral shall be sold,
transferred or otherwise disposed of by any Grantor in a
transaction permitted by the Bank Credit Agreement or the
Indenture, then the Trustee, at the request and sole
expense of such Grantor, shall execute and deliver to
such Grantor all releases or other documents reasonably
necessary or desirable for the release of the Liens
created hereby on such Collateral. At the request and
sole expense of the Company, a Grantor that is a
Subsidiary of the Company shall be released from its
obligations hereunder in the event that all the Capital
Stock of such Restricted Subsidiary shall be sold,
transferred or otherwise disposed of in a transaction
permitted by the Indenture, or such entity is no longer
a "Restricted Subsidiary" as permitted by the Indenture;
provided that the Company shall have delivered to the
Trustee, at least ten Business Days prior to the date of
the proposed release, a written request for release
identifying the relevant Subsidiary and the terms of the
sale or other disposition in reasonable detail, including
the price thereof and any expenses in connection
therewith, together with a certification by the Company
stating that such transaction is in compliance with the
Indenture and the Collateral Documents.
P. Senior Security and Pledge Agreement. The lien
and all terms and provisions of this Agreement are
subordinate and subject to the lien and all terms and
provisions of the Senior Security and Pledge Agreement.
Subject to the Intercreditor Agreement, to the extent any
Grantor's performance of any obligation under this
Agreement would result in a default or breach by any such
Grantor under the Senior Security and Pledge Agreement,
then such Grantor shall have no duty to perform such
obligation under this Agreement to the extent such
performance would constitute a default or breach under
the Senior Security and Pledge Agreement.
Notwithstanding any other provision in this Agreement,
the Trustee will not accept possession of the Collateral
(including, without limitation, the exercise of any
remedies) except in accordance with and as permitted by
the Intercreditor Agreement.
Q. Limitation on Recourse. Anything herein to
contrary notwithstanding, the Trustee shall have recourse
in respect of the Secured Obligations solely to the
Collateral and not to the any Grantor personally or to
assets of any Grantor other than the Collateral.
R. Intercreditor Agreement. Anything to the
contrary set forth herein notwithstanding, this Pledge
and Security Agreement shall be subject to and governed
by the terms and conditions of the Intercreditor
Agreement.
IN WITNESS WHEREOF, each of the undersigned has
caused this Senior Subordinated Pledge and Security
Agreement to be duly executed and delivered as of the
date first above written.
BEAR ISLAND PAPER COMPANY, LLC
By: /s/ Xxxxxx X. Xxxxxxxx
Title: Vice President of Finance
SCHEDULE 1
This Schedule has been intentionally left blank.
SCHEDULE 2
DESCRIPTION OF PLEDGED SECURITIES
PLEDGED STOCK:
Issuer Class of Stock Stock Certificate No. No. of Shares
None
PLEDGED LLC INTERESTS:
Name of Limited Liability Company Type of Interest Percentage
Interest
None
PLEDGED PARTNERSHIP INTERESTS:
Name of Partnership Type of Interest Percentage Interest
None
PLEDGED NOTES:
Issuer Payee Principal Amount
None
SCHEDULE 3
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
I. Uniform Commercial Code Filings
State Corporation Commission of Xxxxxxxx
Xxxxxxx County, Xxxxxxxx
Xxxxxxxxxx County, Virginia
Xxxxxxxx County, Xxxxxxxx
Xxxxxxxxxx County, Virginia
Gloucester County, Xxxxxxxx
Xxxxxxxxx County, Virginia
Louisa County, Virginia
Orange County, Virginia
Richmond County, Xxxxxxxx
XX. Trademark Filings
None.
III. Patent Filings
U.S. Patent and Trademark Office
State Corporation Commission of Xxxxxxxx
Xxxxxxx County, Xxxxxxxx
Xxxxxxxxxx County, Virginia
Xxxxxxxx County, Xxxxxxxx
Xxxxxxxxxx County, Virginia
Gloucester County, Xxxxxxxx
Xxxxxxxxx County, Virginia
Louisa County, Virginia
Orange County, Virginia
Richmond County, Virginia
All foreign offices where Patents have been issued or are pending.
IV. Copyright Filings
U.S. Copyright Office
V. Actions with respect to Pledged Stock
None.
VI. Other Actions
None.
SCHEDULE 4
LOCATION OF JURISDICTION OF ORGANIZATION
AND CHIEF EXECUTIVE OFFICE
Jurisdiction of
Grantor Organization Location
Bear Island Paper Virginia Post Office Box 2119
Company, L.L.C. 00000 Xxx Xxxxx Xxxx,
Xxx. 000
Xxxxxxx, Xxxxxxxx 00000
SCHEDULE 5
LOCATION OF INVENTORY AND EQUIPMENT
Grantor Locations
Bear Island Paper Company, L.L.C. 00000 Xxx Xxxxx Xxxx,
Xxx. 738
Ashland, Virginia 23005
Gloucester County, Virginia
Richmond County, Virginia
SCHEDULE 6
I. Trademarks Registrations and Applications
NONE
II. Copyright Registrations and Applications
Company Title of Date Reg. No
Work Registered
USA Bear Island April 9, TXU 410351
Tracker 1990
(computer
program and
user's
manual)
III. Patents and Patent Applications
Title of Patent No. Date Issued
Country Invention (App. No.) (filed)
Australia Sulphonating 8550277 7/10/86
Mechanical
Pulp Fibres
Australia Sulphonating 588006 9/7/89
Mechanical
Pulp Fibres
Canada System and 1,250,702 3/7/89
Process For
Sulfonating
Mechanical
Pulp Fibres
Finland System Och (8,505,119) 7/1/86
Foerfarande
Foer
Sulfonering
Av Fibrena I
Mekanisk
Sellulosamassa
Norway Fremgangsmaate (8505245) 2/15/93
Og Apparat For
Sufonering
Av
Fibrere I
Mekanisk
Pulp
Norway Fremgangsmaate 171997 5/26/93
Og Apparat for
Forbedring Av
Egenskapene
Til Trefibre
I Mekanisk
Xxxxx Xxx
Sulfonering
I Flere
Trinn
Sweden Forfarande (8506079) 12/20/85
Och System
For
Sulfonering
Av Fibrer I
Mekanisk
Massa
Sweden Forfarande 468818 7/22/93
Och (lapsed
Anordining 9/4/95)
Foer
Sulfonering
I Tvaa Steg
Av Fibrer I
Mekanisk
Massa
United Two-State 4,708,771 11/24/87
States Process For (lapsed
Sulphonating 11/29/95)
Mechanical
Pulp Fibres
United System For 5,089,089 11/3/89
States Sulfonating (lapsed
Mechanical 4/30/96)
Pulp Fibres
IV. Copyright Licenses
None
V. Patent Licenses
None
VI. Trademark Licenses
None
SCHEDULE 7
CONTRACTS
1. Management Services Agreement, dated December 1,
1997, between Bear Islands Paper Company, L.L.C. and
Xxxxx-Xxxxx Industries, Inc.
2. Wood Supply Agreement, dated December 1 1997,
between Bear Island Paper Company, L.L.C. and Bear
Island Timberlands Company, L.L.C.
3. Marketing and Consulting Services Agreement, dated
October 11, 1988 and effective as of July 12, 1988,
between Bear Islands Paper Company, L.L.C., Bear
Island Timberlands Company, L.L.C. and The Elebash
Company.
SCHEDULE 8
VEHICLES
None
ACKNOWLEDGEMENT AND CONSENT
The undersigned hereby acknowledges receipt of a
copy of the Pledge and Security Agreement dated as of
December 1, 1997 (the "Agreement"), made by the Grantors
parties thereto for the benefit of Crestar Bank, as
Trustee. The undersigned agrees for the benefit of the
Trustee as follows:
1.. The undersigned will be bound by the terms of
the Agreement and will comply with such terms insofar as
such terms are applicable to the undersigned.
2.. The undersigned will notify the Trustee
promptly in writing of the occurrence of any of the
events described in Section IV(H)(i) of the Agreement.
3.. The terms of Sections V(C)(i) and V(G) of the
Agreement shall apply to it, mutatis mutandis, with
respect to all actions that may be required of it
pursuant to Section V(C)(i) or V(G) of the Agreement.
[NAME OF Pledged Security
Issuer]
___________________________
By _________________________
Title
Address for Notices:
___________________________
___________________________
Fax:________________________
Annex 1 to Pledge and Security Agreement
ASSUMPTION AGREEMENT, dated as of ________________, 199_,
made by ______________________________, a ______________
corporation (the "Additional Grantor"), in favor of
Crestar Bank, as Trustee (in such capacity, the
"Trustee"). All capitalized terms not defined herein
shall have the meaning ascribed to them in such Indenture
of the Bank Credit Agreement.
W I T N E S S E T H :
WHEREAS, the Bear Island Paper Company, L.L.C. and
Bear Island Finance Company II (together, the "Issuers"),
Bear Island Timberlands Company, L.L.C. and F.F. Xxxxx,
Inc., together as security parties, Xxxxx-Xxxxx
Industries, as pledgor and the Trustee have entered into
an Indenture, dated as of December 1, 1997 (as amended,
supplemented or otherwise modified from time to time),
and have duly authorized the creation and issuance of the
Notes;
WHEREAS, in connection with the Indenture, the
Issuers have entered into the Pledge and Security
Agreement dated as of December 1, 1997 (as amended,
supplemented or otherwise modified from time to time, the
"Pledge and Security Agreement") in favor of the Trustee;
WHEREAS, the Indenture requires the Additional
Grantor to become a party to the Pledge and Security
Agreement; and
WHEREAS, the Additional Grantor has agreed to
execute and deliver this Assumption Agreement in order to
become a party to the Pledge and Security Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Pledge and Security Agreement. By executing
and delivering this Assumption Agreement, the Additional
Grantor, as provided in Section VII(N) of the Pledge and
Security Agreement, hereby becomes a party to the Pledge
and Security Agreement as a Grantor thereunder with the
same force and effect as if originally named therein as a
Grantor and, without limiting the generality of the
foregoing, hereby expressly assumes all obligations and
liabilities of a Grantor thereunder. The information set
forth in Annex 1-A hereto is hereby added to the
information set forth in Schedules(1) to the Pledge and
Security Agreement. The Additional Grantor hereby
represents and warrants that each of the representations
and warranties contained in Section III of the Pledge and
Security Agreement is true and correct with respect to
the Additional Grantor on and as the date hereof (after
giving effect to this Assumption Agreement and the new
information on such Schedules) as if made on and as of
such date.
____________________
1 Refer to each Schedule which needs to be supplemented.
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this
Assumption Agreement to be duly executed and delivered as
of the date first above written.
[ADDITIONAL GRANTOR]
By: __________________________
Name:
Title:
